TORONTO, Nov 28 (Reuters) - Locomotive engineers at Canada’s largest railroad walked off the job on Saturday after talks broke down, but Canadian National Railway (CNR.TO) (CNI.N) said it was using management and non-union staff to provide “the best possible service under the circumstances.”

CN spokesman Mark Hallman said the strike started overnight after the breakdown of talks with the Teamsters Union. “We have deployed our contingency plan,” he said.

The engineers have been without a contract since Dec. 31, 2008, and CN unilaterally imposed new work conditions on Monday, describing that as the only way to break a deadlock.

Dan Shewchuk from the Teamsters Union said that decision triggered the strike. “We were forced into this position by CN’s dramatic move,” he told Reuters.

The Teamsters represent about 1,700 CN engineers in Canada out of a Canadian work force of more than 15,000.

Hallman declined to say how many trains were running, or indicate the impact the strike might have on CN results. Canada’s rail network is used heavily by grain shippers and other exporters of raw materials.

The dispute does not affect CN engineers in the United States, who work under different contracts. Canadian inter-city passenger trains and commuter rail services are set to operate as normal.

The last strike at CN began in February 2007 when 2,800 conductors and yard-service employees walked off the job. It ended two months later after the federal government passed back-to-work legislation, citing the importance of the rail service to the economy.

Labour Minister Rona Ambrose made clear that could happen again.

“At a time when our economy is still recovering, our government will not support a disruption to such a vital component of Canada’s economy,” she said in a statement that urged both sides to accept binding arbitration.

Under the conditions imposed by the company, engineers will get pay increases of 1.5 percent. But their monthly mileage cap will rise to 4,300 miles (6,900 km) from 3,800 miles (6,100 km), matching that of the railway’s train conductors.

The mileage caps are designed to keep train crews from being overworked. CN says the 3,800 mile-limit was set decades ago, in an era of steam locomotives, and a higher limit would improve productivity.

The union said some engineers might have to work seven days a week with no time off under the new system, which CN said was inaccurate. (Additional reporting by Susan Taylor and Allan Dowd; Editing by Peter Cooney) ((janet.guttsman@thomsonreuters.com; +1 416 941 8100; Reuters Messaging: janet.guttsman.reuters.com@reuters.net))